US may put spoke in India’s gas plan

KOLKATA: In his search for energy, Petroleum minister Mani Shankar Aiyar is carving out a new trail from Pakistan to Azerbaijan and Iran to weave a transit route for his gas-starved nation.

Mr Aiyar promises a one-of-its kind dialogue among civilisations in the glare of national and international media, even as Big Brother US leans over the shoulders of both India and Pakistan.

Today, Mr Aiyar kickstarted that dialogue with the first ministerial-level talks with his Pakistani counterpart Amanullah Khan Jadoon on the $4.2-bn, 2,600-km-long Iran-India natural gas pipeline. He also explored the possibility of selling surplus Indian diesel to Pakistan. The two sides met at the swank OGDCL House on Jinnah Avenue that houses Pakistan's Oil and Gas Development Company.

It's early days yet. The pipeline could well end up as a pipedream. What with pressure building up on both Pakistan and India to abandon collaborations with Iran, now in the grip of the US sanctions over its ambitious nuclear plans.

If the feedback from Pakistan is any indication, the establishment here is finding it difficult to shrug off the US pressure. But the finer nuances of the deal will only materialise after Mr Aiyar walks his full course of negotiations with the Pakistani establishment over the next four days, before embarking on the second leg of his Great Oil Hunt to Azerbaijan.

Right now, everyone's hedging their bets on which way the pipeline will go. The chances look 50:50. But somewhere on the horizon Bulgheroni's grand pipeline looks achievable, traversing the rugged mountains and barren plains along what was once the famed Silk Route.

India's demands for industrial growth, its massive hunger pangs for energy resources, and its ability to take the entire region along in its great global voyage to economic stardom makes the pipeline crucial.

And should that happen, Bulgheroni, known to the outside world as the 'voice of Taliban', could eventually be laughing the longest. Who knows?

For now, the crude facts: India, riding an annual 6-7% GDP growth, imports 70% of its crude oil requirements. For some time now, India has been seeking to build a pipeline to bring natural gas from Iran via Pakistan. If things work according to plan, Caspian Sea gas from Azerbaijan could also be hooked up to the Iran-India pipeline.

Enter Pakistan. Occupying the land mass between India and Iran, Pakistan is self-sufficient in gas right now, pumped mostly from its Sui gas fields in Baluchistan, bordering Iran. But it's only a matter of time before that gas burns out. Pakistan's own requirements for economic growth make the abundant Iranian gas eminently desirable.

Iran, in the midst of suffocating US sanctions, is looking east to India and China to make economic sense of its vast natural resources. The country needs to exploit its huge gas reserves to amass economic and political clout in the region.

Or the Iranian state stands the threat of withering in West-imposed global isolation. Iran's eastward push has huge geopolitical ramifications. An Iran-India pipeline project would bring about new energy equations in the region.

To start with, India needs 60m cubic metres of gas per day. This demand is expected to swell to at least 110 to 120 MMSCMD in due course. India hopes to receive Iranian gas at Barmer, in Rajasthan. Here the pipeline will hook up with the trunk HBJ gas pipeline that feeds India's entire north and north-western belt.

India needs huge quantities of gas to primarily feed its giant power and fertiliser plants. Half the gas transported from Iran will fire power plants in the region, the rest would be converted into fertiliser for this agriculture-intensive belt.

So far, so good. Yet, the economic drivers of the project can only take it to a point. Analysts and oil diplomats say the three nations would have to reach some sort of an overarching agreement endorsing political commitment to a transnational pipeline project. In fact, at some stage, India hopes to model a trilateral agreement, mapping the philosophy behind its plan.

The TAP pipeline agreement is one of the options that Mr Aiyar will explore during the Pakistan and Iran legs of his visit.

Political commitment by the three nations also makes commercial sense. For one, multilateral lenders would be willing to sink cash into the project. Some analysts also believe that participation of Indian companies in the project will give it huge credibility and recognition.

This should translate into better interest rates for debt and lower risks. Lower risks, in turn, will bring down insurance costs.

A starting point on these lines could be a joint feasibility study by the nodal energy companies from each of the three countries. For the record, India still insists on a bilateral deal with Iran on supplies of gas at its border to be backed with a similar back-to-back agreement between Pakistan and Iran.

Against this backdrop, Mr Aiyar's visit to Iran via Pakistan assumes significance. It will seek to convert into reality what has so far been shrugged aside as a decade-old pipedream.

Yet, at the end of Mr Aiyar's 10-day Central Asian quest for energy security, things could change dramatically, should he succeed in piecing together what now appears to be a giant jigsaw.